After good expansion, there are now challenging times ahead

Onshore wind energy: Analysis of the German market in 2016 and outlook for 2017

After good expansion, there are now challenging times ahead

Further high onshore expansion figures for the fourth year running have underlined the continued excellent performance of the German wind industry. The German wind industry grew by about 4,625 megawatts (4,259 MW net), thus reaching the anticipated increase of almost a quarter over the previous year, and very nearly the 2014 level. Thanks to further technological development it has been possible to install system-supporting and highly efficient turbines in all regions of Germany. Success is also increasing on the world market. Challenges are posed by the changeover to the tendering process in Germany and difficult conditions in important exporting countries.

Berlin, 7 February 2017 – With 4,625 megawatts of new wind power on land (4,259 MW net), the German wind industry has met the figures forecast for the domestic market by the BWE and VDMA Power Systems in July 2016. According to the analysis made by Deutsche WindGuard that corresponds to a growth of a quarter over the previous year, but remains below the 2014 volume. Both associations also project significant growth for the transition years 2017 and 2018 before the new tendering system comes into force. This is also necessary to supply the heating and transport sectors with as much power from renewable sources as the government targets require.

Continuous expansion in 2016 despite less space in Schleswig-Holstein and Bavaria
“Unlike as in 2014 and 2015 the expansion in 2016 has been increasingly spread out across the whole country. Southern states are catching up, in particular Baden-Wuerttemberg. Bavaria ultimately lives from approvals applied for prior to the introduction of the regulation that the minimum distance to the next building has to be ten times the height of the wind turbine. In region in the north that is anticipated to be included in the so-called grid expansion region, in which the expansion is to be capped, only 32 per cent of the expansion has taken place. 2014 it was 45 per cent und 37 per cent in 2015. There is a threat of a decline in the amount of space available for future projects. This means that federal government should examine the instrument sooner than foreseen for the end of 2017”, said Hermann Albers, president of the German Wind Energy Association.

Transition to tendering shaped by high volumes
As of 31 December 2016 the Federal Grid Agency reported approvals for 2,053 turbines with a total capacity of 6,128 megawatts that are still to be realised. These can still be realised under the updated Renewable Energy Sources Act (EEG). Both associations are of the opinion that the overwhelming majority will be realised during the transition period. This is why they expect further expansion of 4,500 to 5,000 megawatts in 2017 and a further 3,000 to 3,500 megawatts in 2018; these figures being based on the last project implementations resulting from 2016 planning approvals and the first realisations resulting from tenders awarded in 2017. It will be 2019 before all projects will be solely the result of the tendering system. There is reason to fear that the volumes in the important German market will then shrink to below 2,800 megawatts because, depending on the scope of the tenders awarded for citizens’ energy projects, the realisation of which can take several years, a longer than average implementation period is to be expected.

Timely review of the foreseeable decline in the German market is called for
“The industry will work towards balancing out the decline of the German market by means of exports”, says VDMA Power Systems managing director Matthias Zelinger.Hermann Albers further explained: “It is difficult to estimate how many wind turbines will be dismantled when they are no longer eligible for EEG subsidies after 2020. It is possible that the installed capacity of the wind farms will even decline. This would be in conflict with the federal government’s goal of increasing the use of renewable energy in all sectors of the energy industry. The federal government is called upon to quickly examine the need for expansion, and make adjustments where necessary.”

Optimised turbine technology reduces costs and supports system security
“Land-based wind energy remains the cheapest source of energy in the energy system. In recent years we have gone through a considerable learning curve. Better system compatibility, more operating hours and greater power yields have made up for the reduced remunerations in the EEG and sustained system stability, and will continue to do so in 2017. The wind industry will face up to the challenges posed by competitive tendering in Germany and abroad. It will rely on more technical innovation and continue to make a great contribution to ensuring the energy transition is a success in Germany, Europe and worldwide”, said Matthias Zelinger.

Expand the good position on the world market – meet the challenges
The demand for wind turbine technology Made in Germany remains unchanged at a high level on international markets. VDMA Power Systems forecasts a global market for land-based wind turbines in the region of 54,000 megawatts in 2017. “The wind industry is in a good starting position”, emphasised Matthias Zelinger, “German businesses can expand their position in growth markets, but will have to master the challenges. The strong Chinese market remains still largely closed. High demands for local production hampers competition in Turkey and other growth markets. The federal government must continue to argue for fair market opportunities.” The long-term development of the US market is very much a big question mark under the new government. Trade, climate and energy policy are still unclear. Tax incentives have already been agreed by all parties and fixed for five years. The commitment of most states and many investors in renewable energy support the wind industry in the USA and thus also German-based businesses.

Push ahead with grid expansion and enable sector coupling
“Timely grid expansion is the key to successful continuation of the energy transition. The BWE suggests that the approval procedure is accelerated, for example by not treating the strengthening of existing power lines as though they were new builds. Planning procedures generally have to be streamlined. At the same time, federal government has to open up opportunities for sector coupling wider and enable B2B contracts between wind turbine operators and bulk consumers”, stressed Hermann Albers. The industry and the mechanical engineering sector are becoming actively involved in projects and technical system solutions, adds Matthias Zelinger.